China’s USD Bonds in Saudi Arabia: A Strategic Game Changer in Global Finance?

China’s recent issuance of $2 billion in USD-denominated sovereign bonds in Saudi Arabia has sparked a flurry of analysis and speculation, particularly within Chinese social media circles. On the surface, this might appear to be a routine financial transaction. Yet, a closer examination suggests this move could carry profound geopolitical and economic implications.

While the issuance itself is noteworthy, the broader context raises questions about whether China is sending a calculated message to the United States, particularly with the potential return of a Trump administration. Here’s why this development could be far more significant than it initially appears.

The Nuts and Bolts of the Bond Issuance
At first glance, the mechanics are straightforward: China issued bonds, denominated in US dollars, that investors eagerly snapped up. The bonds were oversubscribed nearly 20 times, with over $40 billion in demand for just $2 billion in bonds. This level of interest dwarfs the typical 2-3x oversubscription seen in US Treasury auctions.

Even more striking is the interest rate. China secured rates just 1-3 basis points (0.01-0.03%) higher than US Treasuries—essentially matching the borrowing cost of the US government. For perspective, even AAA-rated countries like Germany or Japan typically pay at least 10-20 basis points above US Treasuries when issuing USD bonds.

The venue for this issuance—Riyadh—adds another layer of intrigue. Sovereign bonds are typically issued in established financial hubs like London or New York, not in the heart of the petrodollar system. By choosing Saudi Arabia, China appears to be subtly challenging the status quo, showcasing itself as an alternative player in the global dollar ecosystem.

A Subtle Signal to Washington
The timing and nature of this bond issuance seem less about financial necessity and more about strategic signalling. By successfully issuing dollar-denominated bonds in Saudi Arabia, China demonstrates it can compete directly with US Treasuries as a destination for dollar investments.

For decades, the US has enjoyed an “exorbitant privilege,” with countries like Saudi Arabia recycling their surplus dollars into US Treasury bonds, effectively subsidising US government spending. Now, China is introducing a rival option. The bonds give countries like Saudi Arabia an alternative, enabling them to park their dollar reserves with Beijing instead of Washington.

SOS

The Muricunt rhetoric : CCP is going to collapse with it's mountain local debt

if Ccp keno sanctioned... bond will be junk mou??..

ooh i wonder if warren buffet got in on some of that action

tldr

how come CCP not using RMB to sell bonds?

US debt is $36 Trillion much more likely to see defaults.

CCP right hand in BRICS wanna use their currency...

and left hand dedollarizing USD...

and CCP mouth still giving blow on USD dick bonds...


topkekk...

Bodo CCP, bond in USD.

They wanna raise 2 billion for what?

Why not use Euro or Yuan?

CCP Dan K/tard kebodohan Sama level

sold over 20 times what they wanna sell. giving same interest as the fed. but US own bond no ppl want buy, ccp US bond everyone wanna büy. why? because they know ccp can payback.

now ccp become middle man for US dollar/bond.

they just got too much usd in hand from trade surplus

most of the countries trade in usd, and owing debt in usd too. now china use their usd on hand to help pay the usd debt of other countries, provided the other countries give them the raw material. like this US if want to use the trick of raising/lowering interest to make those debt owner go broke will be unlikely because china gonna pay for them in usd back to US, and they can get back raw material from those countries

they also selling usd bond to collect usd back. this way countries with surplus trade like saudi those, can buy from china instead of murica on US bond, which make US bond even less attractive. so if US wanna sell more bond they have to raise the interest, but if ccp kacau following them to raise interest, then US debt ceiling will increase rapidly. rheir 1 year debt interest repayment will be higher than their military budget next year.

in short, ccp is acting like a middle man taking the benefit of usd currency. kek

This post has been edited by darkterror15: Nov 23 2024, 08:59 AM

TLDR for those financially incompetent: countries now have option to park their excess USD with China issued bonds instead of US Treasuries.

Chinese don't use emotion to do business.

Not like some puak here so emotional do irrational stuff to satisfy ego and "faith"

1-3 basis points higher? Let's see if they still can once the rates go back up.

This post has been edited by whyamiblack: Nov 23 2024, 09:13 AM

So the BRIC lanjiao currency go lanjiao dy? This xipeepee really fan kuat lo go sark us

some of you might now know, China has moved more than 700billion usd out from US. They reinvested in many other areas. By end of this year, they will be looking at 1.2 trillion to 1.4 trillion profit. By next year can just go over 2 to 3 trillion in profit. Countries may take loan from them in usd but payback in rmb.

This post has been edited by Avex: Nov 23 2024, 09:25 AM

They have tons of US BOND, us pay them interest, they pay 1-3 bassi points higher to others.

What is up will eventually come down. Throughout history this has always proven.

Just matter of when.

Currency != bond

Rates go up, bond yield will go down.

so what happens now? the Dec rate cut will happen or not??

bodo lol